[opendtv] Re: Apple TV: Eddy Cue on streaming video and TV channels - Nov. 6, 2015

  • From: Craig Birkmaier <brewmastercraig@xxxxxxxxxx>
  • To: opendtv@xxxxxxxxxxxxx
  • Date: Fri, 13 Nov 2015 12:03:51 -0500

On Nov 12, 2015, at 10:22 PM, Manfredi, Albert E
<albert.e.manfredi@xxxxxxxxxx> wrote:

Craig wrote:

There is no single gatekeeper for MVPD bundles either.

Yes there is. The gatekeeper is the MVPD net. Only the MVPD can allow content
to the headend.

What MVPD net?

Is that like the grocery store net?

Cable companies built the first MVPD networks and upgraded them several times.
They own it and can decide whose content they want to offer in various tiers.
The only limitation is that they, like Apple, must negotiate deals for the
content, and thus are at the mercy of the content owners who dictate the terms
of these licensing deals.

The DBS systems do exactly the same, and in the case of Dish networks, they use
a single operations center to program TWO MVPD services - DBS and a Virtual
MVPD service.

The telcos and Google have overbuilt the cable systems in some, but not all
markets. They ALSO license content for their MVPD bundles.

Sony licenses the same content for their virtual MVPD service.

Clearly there is no gatekeeper (i.e. Single source for this content) when
consumers have a minimum of three MVPD services to choose from.

If there is a "gatekeeper" it is the content owners who dictate the terms under
which they will license the content in the MVPD bundles.

But more than 80 million U.S. homes choose to do so.

What is my perennial response to this perennial banality?

That we are all a bunch of lemmings, like the PC suits in the 1984 commercial.

He is not going direct to consumer with The CBS network, as All Access
only offers affiliates in selected markets to offer portions of the
CBS live linear programming

He's going it alone in the sense that he is not colluding with other
congloms, to get on the "best" tier.

He does not need to, nor do any of the other broadcast networks. The FCC
mandates the carriage of all local stations on the most basic, lifeline tier.
The exception is DBS, where the local station package is optional, and Virtual
MVPDs where access to the affiliates of the broadcast networks is very limited.
Sling has no broadcast networks or affiliates; Sony has affiliates in a handful
of large markets. Even CBS only offers the live network feed in the markets
where they own stations, and a handful of other markets.

That being said, all of the networks leverage the broadcast network to REQUIRE
carriage of other networks they own on the extended basic tier. As five
companies own 90% of the extended basic channels, it comes as no surprise that
the extended basic tier is similar across all MVPDs, and priced at about the
same level.

He is only competing against the other congloms here. He is giving the local
broadcaster a role, for the linear stream, and I fully expect him to offer
this in more markets in the future.

That remains to be seen. The decision regarding more markets is not his; that
is in the hands of each affiliate. The real issue is whether there is any
significant economic opportunity for stations with All Access.

It is highly likely that the local station logjam will be broken next year
after the FCC decides how to define and regulate Virtual MVPDs. Most stations
would prefer to join a virtual MVPD, rather than a SVOD service like All
Access, especially if there are a large number of traditional cord cutters who
move to Virtual MVPD services. In reality they can do both, just as they do now
with DBS, Cable and the Fios services; but is it far more likely that the
audience will stay with a MVPD bundle, rather that signing up for each network
individually.

And like Netflix, he is adding some exclusive content to
attract subscribers to his bundle.

This is Craig, redefining his words to make it appear like he was always
right. I already said, this is the new definition of bundle. Moonves has
always "added exclusive content" to everything he transmits, Craig, bundled
with other congloms' content or not bundled. This is not like Netflix.
Netflix borrows from all sorts of content owners. CBS All Access is all their
stuff.

You are confused.

First, CBS does not own everything that is carried on the broadcast network. It
has only been possible for a network to own prime time shows for the past two
decades - prior to that they had to buy prime time programming from independent
producers and could only own a non controlling interest in any program. Now
they own studios that produce some but not all of their programming.

And they do not own any of the sports programming they carry - that is all
licensed, which is a major reason they cannot carry NFL football on All Access.

Exclusive programming is the means by which most subscriptions are sold. It is
the reason HBO can charge $15/mo for a premium bundle. Netflix had some
following licensing content from the congloms, but really took off when they
started developing exclusive content. CBS All Access is rather pedestrian and
unnecessary, as almost everyone has access to the CBS network; and access to
catch-up services like Hulu. That is why the Hollywood Reporter calls All
Access a VOD service.

You can read between the lines of what Moonves is saying. The only way All
Access can attract a significant subscriber base is if they offer exclusive
content.

Apparently the Hollywood Reporter has a different view of
CBS All Access than yours. They are calling it a "digital
subscription VOD platform."

And how do I define it, Craig?

Beat's me. You seem to think this is the future. That we will all buy our
content direct from each of the content congloms...

Well, not ALL, as you choose not to pay.

That's the legacy model, aimed at addicts such as yourself. Those numbers are
declining. You need to grasp the importance of that, or you will continue to
miss what's going on here. CBS All Access is the new model. In the new model,
he goes direct to consumer.

I'll agree that it is an established, and time tested business model. But we
completely disagree that it is in significant decline and that it will be
replaced by some new Internet based business model.

The "decline" is primarily based on the economy and the fact that prices have
been pushed beyond the tolerance of some people. That is easily corrected as
this content moves to Internet distribution. We will have a better idea of the
new business model next year.

All Access is a bundle WITH dual revenue streams Bert.

Okay, but fewer ads:

http://www.ew.com/article/2014/10/16/cbs-launching-streaming-service

I hope so. Why would I pay $6/mo to watch ad supported programs from the CBS
library, when I can, and do, pay $8.50/mo to watch ad free programs from all of
the congloms and original content from Netflix? And why would I pay $9.99 to
CBS to get rid of the ads?

What I understand is that you claimed you started streaming shows
from CBS in 2005, then admitted that you did not dedicate a PC to
this task until 2010,

Just like I thought, Craig. What exactly is contradictory in what I said? Is
it not possible to stream TV to a PC for catch-up, while that PC is not
connected to the TV? I said explicitly that I was doing this for several
years **before** dedicating a PC to the TV. Get it?

It is not possible to stream programs from a service that did not exist in 2005.

Yes, but once again, you missed it. The PC was older, not brand new.

Older than 2005?

The significant point is that your mantra about "extensible" is simply false.
Just because a standard is "extensible" it does not mean the hardware is.

Most standards are not extensible per se' - most extensible standards are
layered in a manner that permit components to be upgraded without having to
start over. The way the IETF manages Internet standards is a good example. What
makes the Internet unique, compared to the ATSC standard, is that anyone can
create a new non-standard service that can be expressed with and delivered to a
screen with bits. Flash is a good example of this.

The IETF only standardized after the technology has proven to be worth the
effort to standardize - e.g. HTML 5.

Hardware can be extensible in any number of ways. Your old PC was too slow to
handle h.264, but it could easily have been upgraded with a new graphics board
with h.264 acceleration. You most likely did not take that route because a new
PC did not cost significantly more than upgrading the old one.

We are all stuck with TVs with mandated ATSC tuners that hardly anyone uses.
These tuners are not extensible. But thanks to HDMI the TVs are, and we have
seen a continuos stream of products that extend the capabilities of that TV.

Just because the Internet carries a more CPU or GPU-intensive media stream
does not mean that every device is magically compatible.

Obviously. For better or for worse, we endured the PC treadmill driven by
Moore's law. New applications became possible as the processing power
increased. The only major difference between the PC treadmill and the Mac
treadmill was that Apple did a better job of keeping older hardware relevant,
while most PC vendors kept prices low and pushed frequent replacements. In
reality the PC vendors had little choice, as they were all building the same
commodity boxes with Intel and Microsoft claiming most of the profits.

It is interesting to see the landscape changing. Now having control of both the
hardware and software is critical to success. Thus we see Microsoft getting
into the hardware business, and Google announcing that they are going to
develop their own chips for Android phones.

This is another point I've been trying to get across for more than a decade.
As to PC vs Mac speeds, sorry, Craig. Try again.

Processor speeds are only one factor in the ability of a computer to handle a
range of tasks. The PC was a disaster for video production until the last few
years. Apple invented FireWire and QuickTime to help Macs deal with digital
video back in the days when moving huge chunks of media data around was a real
challenge.

And today processor speed is becoming far less relevant - the integration of
hardware and software is now the measure of success. It is the reason that
Apple dominates the laptop market - but not in the volume of machines sold.
Apple just takes the lion's share of the profits, as they do with smart phones.

Regards
Craig


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